obligation to provide information and advice on the content of the LégiFiscal tax rule


Background of the case ¶

Then over 70 years old, CD took out four life insurance policies with company S, through her bank customer adviser.

Payment of premiums:

– A contract with 68,602.06 euros, a contract with 200,508.10 euros, a contract with 76,224.51 euros, and a contract with 4,420.54 euros.


She dies and leaves as sole beneficiary of her life insurance contracts one of her sons, Mr. B Y.

By letter, he asked company S for compensation of €5,000 on the grounds that his mother had been badly advised to make her financial investments on life insurance contracts beyond the age of 70.

By mail he was told that because of his dispute the funds were blocked pending an assignment.

Mr. BY had company S and SG summoned before the judge in chambers in order to obtain their order to give him the life insurance contracts and to send him the proceeds of the investments due to him.


SOGECAP paid the funds, retaining 16% of the capital on the day of CD’s death, in respect of the payment of transfer tax on death, pursuant to the provisions of article 757 B of the CGI (General Code of taxes).

Mr. BY had SOGECAP and SG summoned before the TGI (Tribunal de Grande Instance) of PARIS for the purpose of compensation for his damage for breach of the obligation to inform, advise and warn

By judgment of June 8, 2020, the TGI dismissed Mr. Y of all of his claims for compensation.

He appealed the decision.

Mr. BY does not show that he suffered a loss of opportunity in direct relation to the harmful event, the Court dismissed his claim for damages, thus confirming the judgment.

On the breach of the duty of advice of the SG on the multiplicity of the contracts subscribed

On the fact that there are four contracts:

Mr. BY demonstrates no prejudice, as regards the payment and management fees higher than those which would have been levied in the event of subscription to a single contract).

For the court: the SG did not fail in its duty to advise.

  • The obligation of general information on the product and its characteristics weighs on both the insurer and the insurance intermediary,
  • The obligation to advise only weighs on the insurance intermediary, since the insurer has not had direct contact with the subscriber.


The obligation to provide information on the cover taken out weighed on SG as broker and SOGECAP as insurer, as did the obligation to provide information on the tax regime applicable to the contract taken out.

The duties of advice relating to the subscription of several contracts and the applicable tax regime weighed only on the SG.


On the breach of the obligation to provide information on the guarantees taken out


For the court, SG and SOGECAP demonstrate that they have met their obligation to provide information by submitting an information notice when each contract is taken out. CD affixed its signature to each membership form with the mention indicating that it declared to have read it.


On the failure to provide information and advice on the tax regime applicable to contracts.


The insurance intermediary, the broker, and the insurer have an obligation to provide information on the adequacy of the product offered with the personal situation and the transmission objectives of the client.

The broker has an obligation to advise on options for the transfer of assets.


The court held that:

SG and SOGECAP failed in their obligation to inform and SG in its obligation to advise on the applicable tax rule.

No proof that the information was provided to CD, on the taxation applied to the sums transmitted in the event of a contract signed after 70 years.

For Mr. BY the damage caused by these breaches would be:

  • A loss of chance to receive funds subject to an advantageous tax regime
  • For this it was necessary that at the time of subscription, there was a financial investment with an equivalent return but generating lower tax deductions for the beneficiary upon death;

Furthermore

CD left two sons to succeed him and Mr. BY was the sole beneficiary (excluding the estate). Otherwise there would have been a division between the two heirs, which would have been detrimental to him.

Therefore, “Mr. BY, who does not show that he has suffered a current and certain loss of opportunity in direct relation to the harmful event, will be dismissed from his request for damages and the judgment confirmed”.

For these reasons :

The Court, ruling as a last resort by contradictory judgment rendered by making it available to the registry,

CONFIRMS the judgment in all its provisions,

Adding to it,

Condemns Mr. BY to pay SOCIETE GENERALE and SOGECAP, each, compensation of 2,000 euros on the basis of the provisions of Article 700 of the Code of Civil Procedure,

Orders Mr. BY to pay the full costs of the appeal.

Court of Cassation of appeal n°Judgment of the Court of Appeal of Paris of February 22, 2022, n° 20/08409

The court recalls the duties and obligations of each, insurer and intermediary.

In this case, it weighs on insurance companies and insurance brokers, in their capacity as professionals in life insurance contracts, an obligation to provide information on the content of the tax rule.

Here it is set out in Article 757 B of the CGI, which shows that the investment of sums in a life insurance contract may be less tax-efficient for the heirs, in this case the son in the case concerned. .

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